Small-Cap Stock Takeoff Adds $318 Billion to Emerging Markets

(Bloomberg) — With the final quarter of 2023 approaching, one winning strategy in emerging markets is becoming clearer: buying shares in smaller companies.

Most Read from Bloomberg

The trade has produced an extra gain of 12 percentage points over the MSCI large-cap index so far this year, on course for the second-best relative returns in the past 14 years. Part of the reason is that large-cap companies are more likely to be exposed to China’s economic troubles.

Small-caps, on the other hand,…